SIDC Module 19 key terms

The calendar date on which a securities trade must be finalized, meaning the buyer pays cash and the seller delivers the securities, completing legal transfer of ownership.

The date on which the terms of a securities transaction, including price, quantity, and instrument, are agreed between buyer and seller, but before any settlement occurs.

The standard elapsed time between trade date and settlement date, expressed in business days, that a market convention prescribes for a given instrument class.

A settlement cycle in which the settlement date falls two business days after the trade date, the common convention for many cash equity and bond markets.

A settlement mechanism linking securities transfer and cash payment so that delivery occurs only if payment occurs, reducing principal risk for both parties to the trade.

A securities transfer instruction in which no corresponding cash movement occurs, typically used for collateral moves, gifts, or corrections rather than market trades.

A message sent by a trading party to its custodian or depository specifying the securities, quantity, counterparty, and account details needed to complete a settlement.

A pre-agreed, reusable set of settlement details held on file by a custodian, so that routine trades settle without the client re-sending full instructions each time.

The process by which a depository or intermediary compares the buyer's and seller's settlement instructions and confirms that their key economic terms agree before settlement proceeds.

A transaction that does not settle on the intended settlement date, often due to missing securities, insufficient cash, or mismatched instructions, and remains outstanding until resolved.

A remedy in which a receiving party, after a counterparty fails to deliver, purchases the securities in the market and passes the resulting cost to the failing party.

An entity that holds securities in immobilized or dematerialized form and operates the book-entry system through which ownership transfers are recorded and settled.

A financial institution that safekeeps client securities, processes settlement and corporate actions on the client's behalf, and often provides reporting and cash management services.

A local institution appointed by a global or primary custodian to hold assets and perform settlement and safekeeping functions in a market where the primary custodian lacks direct presence.

The conversion of physical securities certificates into electronic book-entry form, so that ownership exists only as a depository record rather than as a paper document.

The practice of holding physical securities certificates in a central depository vault while ownership changes are recorded electronically, avoiding physical movement of certificates between parties.

An event initiated by an issuer that affects the securities it has issued, such as a dividend, stock split, merger, rights issue, or redemption, requiring processing by custodians and holders.

The date set by an issuer on which a holder must appear on the register to be entitled to a corporate action benefit such as a dividend or vote.

The date from which a security trades without the right to a pending corporate action benefit, falling before the record date to allow for settlement timing.

The right of a beneficial owner to receive the economic or voting benefit of a corporate action, determined by holdings on the record date and confirmed through the custody chain.

The person or entity that enjoys the economic benefits and risks of owning a security, even where legal title is held by a nominee or custodian.

An entity registered as the legal holder of securities on behalf of underlying beneficial owners, simplifying transfer and administration within a custody or depository structure.

A distribution of cash or shares by a company to its shareholders, usually declared quarterly or annually and paid according to holdings on the record date.

Tax deducted at source by a payer on income such as dividends or interest, with the rate often depending on the investor's residence and applicable tax treaty.

The process of recovering withholding tax that was over-deducted, typically by submitting documentation to a tax authority to claim a reduced treaty rate.

The exercise of voting rights attached to shares by someone other than the registered holder, often instructed by the beneficial owner through the custody chain.

The total value of a fund's assets minus its liabilities, divided by the number of shares or units outstanding, used to price subscriptions and redemptions.

The specific time on a given day at which a fund's assets are priced to calculate net asset value, determining which trades receive that day's price.

A convention in which subscription and redemption orders receive the net asset value calculated at the next valuation point after the order is accepted, not a known prior price.

An investor's purchase of new shares or units in a fund, settled in cash at the applicable net asset value plus any stated sales charge.

An investor's sale of fund shares or units back to the fund, receiving cash based on the applicable net asset value less any stated redemption fee.

The function that maintains the register of fund holders, processes subscriptions and redemptions, and handles distributions and investor recordkeeping on behalf of a fund.

The comparison of two independent records, such as internal books against a custodian statement, to identify and explain differences before they become errors.

A discrepancy identified during reconciliation between two sets of records, such as a position or cash difference, that must be investigated and resolved.

The quantity of a particular security or cash balance held in an account at a given time, forming the basis for valuation, reconciliation, and regulatory reporting.

The risk that one party to a transaction delivers its side but the counterparty fails to deliver, leaving the first party exposed to loss of the full transaction value.

The risk that the other party to a trade or contract defaults before fulfilling its obligations, causing financial loss or disruption to the exposed party.

The risk of loss from inadequate or failed internal processes, people, systems, or external events, including settlement errors and processing failures in securities operations.

The automated, hands-free flow of a trade from execution through confirmation, clearing, and settlement, without manual re-keying or intervention between systems.